Obama Unveils Plan to Boost Electric Power in Sub-Saharan Africa

By Julianna Goldman and Margaret Talev -
Jun 30, 2013

President Barack Obama, putting his
mark on U.S. aid to Africa, announced a plan to boost access to
electric power in the sub-Sahara and said America stands to
benefit if the continent reaches its full economic potential.

Obama unveiled the $7 billion initiative dubbed Power
Africa at the University of Cape Town in a speech that his aides
billed as the centerpiece of his three-country tour through
Senegal, South Africa and Tanzania to promote trade and
investment on the rapidly growing continent.

The president’s goal is to double access to electricity
across six countries that the White House has singled out for
promoting good governance -- Ethiopia, Ghana, Kenya, Liberia,
Nigeria and Tanzania.

“I’m calling for America to up our game when it comes to
Africa,” he said. “There’s no question Africa’s on the move,
but it’s not moving fast enough for the child still languishing
in poverty in forgotten townships.”

American companies see growing opportunity in Africa. U.S.
merchandise exports to the 49-country region were $21 billion in
2011, up 23 percent from 2010, according to the Office of the
U.S. Trade Representative. Imports from sub-Saharan Africa were
worth $74 billion in 2011, up 14 percent from 2010. Most of
that, about $60 billion, was crude oil.

Africa has 15 percent of the world’s population yet it
accounts for only 3 percent of energy consumption, according to
a 2011 report by the African Union and other organizations.

Mandela’s Health

With Nelson Mandela’s fragile health weighing heavily
throughout the African trip, the U.S. president has invoked the
anti-apartheid icon’s legacy to draw the connection between
democratic values and economic growth.

Obama’s speech included a tribute to Mandela and he and his
family toured the apartheid-era prison at Robben Island,
finishing in a courtyard near Mandela’s former prison cell. He
then visited a community center that provides HIV education and
treatment run by Archbishop Desmond Tutu’s foundation.

While Africa is rising, progress is “fragile,” vulnerable
to “the rot of corruption” and “the undertow of conflict,”
Obama said in his speech.

He will travel today to Tanzania for the last stop of the
three-nation tour. In the country’s fast-growing metropolis of
Dar es Salaam, he’ll convene a roundtable of company executives
and promote investments in electrification projects.

Recognizing Africa’s rapid growth -- as well as domestic
budget constraints -- Obama said yesterday the U.S. is moving
beyond the kind of direct financial assistance its provided in
the past. Instead, he said he wanted to promote a new model that
focuses on Africa’s “capacity to solve problems.”

Partnership Model

The power initiative follows the public-private partnership
model and builds on his administration’s efforts to enhance food
security, fight malaria and attempt to eradicate the spread of
HIV/AIDs for Africa’s next generation, he said.

Power Africa’s $7 billion in government assistance will
complement $9 billion in private funds to double access to power
in sub-Saharan Africa, where more than two-thirds of the
population is without electricity, according to the White House.

During the first, five-year phase, the project’s goal is to
add more than 10,000 megawatts of cleaner, more efficient
electric generation capacity and to expand electricity access to
at least 20 million new households and commercial entities,
according to the White House.

General Electric Co. (GE) is among the companies that have
contributed to the $9 billion in private-sector funding for the
program’s first phase. It has committed to help bring 5,000
megawatts of new energy to Tanzania and Ghana.

Increasing access to power will “plug Africa into the grid
of the global economy,” Obama said.

Government Resources

Officials declined to put a price tag on the total effort
and didn’t specify how much of the $7 billion in government
resources Congress would need to appropriate for the initial
phase. The sum isn’t all straight assistance and includes money
from the U.S. Agency for International Development, the Overseas
Private Investment Corp., the Export-Import Bank and other
agencies, they said.

“The program is welcome support to the continent where
energy access and energy poverty remain significant concerns,”
said Taryn Wilkins, an analyst at Bloomberg New Energy Finance
in Cape Town. “Key to the success of the implementation of the
program is the support of local governments and policy
regulation. To date this has been fragmented and inconsistent
and resulted in slower development of energy infrastructure
programs.”

Obama’s Engagement

The announcement came amid criticism that Obama’s
engagement with sub-Saharan Africa has lagged behind his
predecessors, Bill Clinton and George W. Bush, giving China an
opportunity to tap the region’s resources.

Bush, who took U.S. spending on Africa to new levels, made
a six-country visit in 2008 and a three-country stop in 2011
after he left the White House. His Africa legacy includes
PEPFAR, a $15 billion commitment to prevent and treat AIDS
infections, credited with saving or extending millions of lives.

Obama may meet his Republican predecessor while in Dar es
Salaam. Bush will be there at the same time for a summit to
empower Africa’s first ladies, sponsored by the George W. Bush
Institute. First lady Michelle Obama will join Laura Bush at the
event.